The market for cod liver oil pills is characterized by the demand and supply equations: Q^D = 100 - 4P and Q^S = -20 + 2P, where P is the price per bottle and Q is the quantity of bottles. If consumers want to purchase 60 more bottles at any given price, what is the new equilibrium quantity?

Question

Quizplus · Accepted Answer

The new demand equation, after increasing the demand by 60 bottles, becomes Q = 160 - 4P. Setting the new demand equal to supply (-20 + 2P) and solving for P gives P = 30. Substituting P = 30 into the new demand or supply equation gives the new equilibrium quantity of 40 bottles.

The Market for Cod Liver Oil Pills Is Characterized by the Demand